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ECONOMICS

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2303-5013
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The Impact of the Applied Exchange Rate Regimes on the Internal Balance of Transition Countries

Vlado Vujanić
  • Corresponding author
  • The Republic of Srpska, Ministry of Finance, Banja Luka, Bosnia and Herzegovina
  • Other articles by this author:
  • De Gruyter OnlineGoogle Scholar
/ Dragan Gligorić
Published Online: 2017-12-29 | DOI: https://doi.org/10.1515/eoik-2017-0018

Abstract

One of the key goals of the economic policy makers of every country is to achieve internal and external balance. An unavoidable segment of the analysis concerning the achievement of internal and external balance is certainly the influence of the exchange rate regime applied in a country. European transition countries, despite their similar initial problems and final objectives, applied different exchange rate regimes adapted to the economic circumstances and needs of the country. The paper aims to examine and demonstrate the impact of the applied exchange rate regime on the internal balance of the transition countries. The research encompasses 10 representative transition countries, in the period from 2000-2014. The results of the research, from the aspect of internal balance, confirmed the justification of the application of the floating exchange rate regime in more developed, but not in less-developed, European transition countries. The application of floating exchange rate regimes in less-developed transition countries is associated with a considerably higher average inflation rate, which may be explained by the higher import dependence of lessdeveloped countries and by the consequent transfer of depreciation to price growth.

Keywords: transition countries; exchange rate regimes; economic growth; unemployment; inflation

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About the article

Received: 2017-08-07

Revised: 2017-08-10

Accepted: 2017-08-28

Published Online: 2017-12-29

Published in Print: 2017-12-20


Citation Information: ECONOMICS, Volume 5, Issue 2, Pages 55–68, ISSN (Online) 2303-5013, DOI: https://doi.org/10.1515/eoik-2017-0018.

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© 2018. This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License. BY-NC-ND 4.0

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